Wednesday, August 5, 2015

Despite the nuclear deal with the P5+1, Iran has very little chance
to deliver its gas to the European market in the years to come, Vladimir
Yevseyev, the expert on Iran, the director of Russian Center for Public
Policy Research, told Trend August 5.

“Moreover, in the medium term, Iran’s gas will not be able to compete
with the Russian gas in the European market,” the expert added.

He said there are several reasons for this.

“Firstly, Iran, in order to bring its gas to the European market,
needs the lifting of sanctions, and so far the matter rests in only
their mitigation,” said Yevseyev. “It is premature to say that in the
near future there will be the lifting of sanctions or defrosting of
significant assets of Iran.”

Even in the most favorable case, the process of easing the sanctions will only begin the next year. Yevseyev added.

“And the US will for eight years only suspend the sanctions, while
Europe, perhaps, may stop them. In any case, it is necessary to wait for
a report of the IAEA director general, and on this basis only some
proposals will be developed to mitigate the sanctions.”

Secondly, the expert said, as of now Iran has no free volumes of gas that it could deliver to Europe.
Domestic gas production, especially for electricity generation is
growing very fast in Iran and in fact, the whole volume of production in
the country is used in the domestic market, he said.

Some free volumes are supplied to Iraq and these supplies will be expanded, according to the expert.
Moreover, there are plans on laying an underwater pipeline to Oman
and the issue of gas supply to Pakistan also remains open, he added.

“Under these conditions, I can’t see even a theoretical possibility
that there can emerge any considerable volumes of Iranian gas which
could be delivered to Europe,” he said.

Although Iran has huge gas reserve, considerable amount of
investments - $50 billion to 80 billion – as well as new technologies
will be required for processing it, according to estimations, said the
expert.

He added that Iran will not be able to get them in the near future.

The expert said he is more than confident that even if the Iranian
assets worth about $130 billion in the US are unfrozen, Iran won’t get
this money in a short time.Unfreezing these funds will take long time, if it at all, according to the expert.

“Foreign investors will be afraid of investing in the projects in
Iran as the agreement signed between Iran and the "Six" is reversible
and there is no guarantee that it will not be canceled,” the expert
said.
"Nobody knows what will happen in the US after the new president is
elected next year,” he said.

“There is no understanding of the situation
in two years. In such circumstances, big business will not work."

He said that in such circumstances, most likely, Iran would be unable to obtain Western technologies in the required quantities.

"In such circumstances, it is impossible to rapidly ramp up the production of natural gas," the expert said.

“Moreover, Iran wants to sell its gas at a high price,” he said. “The
buyers, including European ones, are not pleased with this.”
“Thus, the gas pipeline from Iran to Turkey, which allows to supply
at least 10 billion cubic meters, has been filled by only six billion
cubic meters mainly because of the high price of Iranian gas,” he said.

"At present, if we compare the prices at which Turkey buys natural
gas, the most expensive gas is Iran’s gas,” the expert said. “By its
price Russia’s gas ranks second. And the cheapest gas is Azerbaijan’s
gas."

“As for Iranian oil, then, its supplies to Europe are more real,” he said.

“A part of Iranian oil is located in tanks: either in tankers or in
storage on the territory of Iran,” he said. “The volumes of this oil are
nearly 40 million barrels per day. It could appear on the market if the
oil embargo is lifted,” he said.

However, in order to further have a serious impact on the oil market, Iran will need to increase production volumes.

“Now, these volumes are about 500,000-800,000 barrels per day,” said
Yevseyev. “It is not so critical for world prices. Therefore, it is
premature to say that Iran will be able to have a serious impact on the
oil market.”

As for any other Iranian products, in addition to oil and gas, Iran
currently doesn’t produce anything that is very necessary to Europe in
large volumes, according to the expert.

He went on to add that Iranian business is mainly of a regional nature and doesn’t seriously depend on Europe.

In addition, the technologies in Europe are higher than in Iran, and,
accordingly, the Iranian products won’t be in great demand on the
European market. However, they are popular in neighboring (Muslim) countries, he
said.

“All the production they have has relatively modest volumes,” the
expert said. “Maybe, pistachios are the only exception. The only thing
that Iran can export in large volumes at the moment is pistachios.” Hmmm......Kicking out Russia as energy provider seemed a great idea at the time of the Nuclear deal.

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